International Paper plans to close its uncoated freesheet and coated paperboard mill and associated operations in Franklin, VA, and its containerboard mills in Pineville, LA, and Albany, OR. It will also permanently shut the previously idled No. 3 machine at its Valliant, OK, containerboard mill. Valliant’s two other machines will continue to operate.

The move will reduce IP’s North American paper and board capacity by 2.1 million tons.

IP chairman and CEO John Faraci said, “We have concluded that we have excess capacity in our North American paper and packaging businesses, and these decisions will better match our supply with our expected customer demand.”

The closures will affect about 1,600 employees. Following the shutdowns, IP’s North American capacities will be about 10 million tons of containerboard, 2.6 million tons of uncoated freesheet and 1.7 million tons of coated paperboard.

The closures will result in estimated non-cash asset write-off and accelerated depreciation charges of about $1.1 billion and cash severance charges of about $60 million to be recorded in 4Q09 and 1Q10, plus additional closure costs to be determined and recorded as the facilities are closed.

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